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But Broadbent's concentration on the likely peak terminal rate next year is what matters most. For context, that UK terminal rate, now pencilled in for around the middle of 2023, rocketed almost two full percentage points from just prior to the botched mini-budget to as high as 6.25%. Fed terminal rates, now targeted about March next year, have jumped 150 bps to 5% over the past two months. And Morgan Stanley, for example, see a UK terminal rate as low as 4% - a huge drop from current market pricing. The stubborn refusal of terminal rate pricing to return to where it was last month reflects the extent of those jitters.

Prime Minister Liz Truss announces her resignation at 10 Downing Street on October 20, 2022 in London, England. Leon Neal | Getty ImagesLONDON — U.K. Prime Minister Liz Truss resigned Thursday following a failed tax-cutting budget that rocked financial markets and which led to a revolt within her own Conservative Party. "I recognize though, given the situation, I cannot deliver the mandate on which I was elected by the Conservative Party. I have therefore spoken to His Majesty the King to announce that I am resigning as leader of the Conservative Party." The number who have written letters to Brady expressing no confidence in the prime minister was reported to be over 100 by Thursday.

☆ Taking cover in bonds ahead of a recession? BlackRock says that's now an 'obsolete' strategy
▼ + stars: | 2022-10-20 | by ( Weizhen Tan | ) www.cnbc.com time to read: +4 min

One important part of the recession playbook is "obsolete" — and that's seeking shelter in bonds, according to BlackRock, the world's largest asset manager. "We're underweight government bonds because yields have room to move higher, and we don't think they can be a safe haven when recession comes," BlackRock wrote. Higher rates and inflation will create a "ripe environment" for investors to demand higher term premiums for long-term bonds, BlackRock said. The move sent financial markets into a tailspin , as investors ditched U.K. bonds and sold off the pound. What to buy Investors still looking to buy bonds should prefer inflation-linked ones as they are "not pricing in persistent inflation," BlackRock said.

☆ India cenbank's 2013 playbook to rebuild FX reserves unlikely to work-analysts
▼ + stars: | 2022-10-18 | by ( Swati Bhat | ) www.reuters.com time to read: +5 min

Register now for FREE unlimited access to Reuters.com RegisterTo defend the rupee, the Reserve Bank of India has dipped into its forex reserves. "It would be important to rebuild FX reserves for sure. Reuters GraphicsUNPROFITABLE SPREADSBack in 2013, the RBI had offered to swap the U.S. dollars banks had raised via foreign currency non-resident (FCNR) deposits or foreign currency funding for rupees at concessional rates. And while reserves at current levels are adequate to cover more than eight months of imports, analysts say a sustained depletion could cause some concern. Bank of Baroda's Sabnavis suggested floating sovereign bonds, like the Resurgent India bonds (RIBs) India Millennium Deposit bonds (IMDs) in the past, to help boost forex reserves.

☆ Britain's failed tax experiment will leave economic scars and credibility issues, analysts say
▼ + stars: | 2022-10-18 | by ( Jenni Reid | ) www.cnbc.com time to read: +6 min

U.K. Prime Minister Liz Truss faces increasing pressure to resign. The yield on these bonds, which reflect the cost of borrowing for the government and influence interest rates on many products such as mortgages, eased lower after the statement Monday. The yield on 10-year bonds, the closely-watched benchmark seen as the indicator of long-term interest rates, remains significantly elevated at 4.045%, up from 3.49% before the budget. Bonds tend to become less attractive when interest rates rise, decreasing their price and sending up the yield. watch nowWider effectsWith the ideologically-driven policy platform Truss ran on now dead in the water, there is uncertainty in many other areas.

☆ Government bonds no safe haven in central bank-driven recession -BlackRock
▼ + stars: | 2022-10-17 | by ( Davide Barbuscia | ) www.reuters.com time to read: +2 min

NEW YORK, Oct 17 (Reuters) - Government bonds may not offer much protection in a recession if surging inflation pressures central banks to continue tightening monetary policy, the BlackRock Investment Institute said. Risks of a global recession have increased as central banks around the world tighten monetary policy to bring down consumer prices. While central banks have typically eased monetary policy to boost economies when they showed signs of contraction, "That era is over. Now central banks are set to induce recessions by over-tightening policy," BlackRock, the world's largest asset manager, said. BlackRock expects the correlation between bonds and stocks to remain positive, meaning bonds will unlikely protect investors from falls in stocks valuations.

☆ British U-Turn Shows Central Banks Still Rule (and That’s Not Always Good)
▼ + stars: | 2022-10-17 | by ( Jon Sindreu | ) www.wsj.com time to read: 1 min

In its game of chicken with the U.K. government, the Bank of England has emerged victorious. Investors are relieved, but in truth nobody has much to celebrate. On Monday, U.K. Treasury chief Jeremy Hunt rolled back £32 billion, equivalent to about $36 billion, out of the £45 billion in tax cuts promised by his predecessor Kwasi Kwarteng . British sovereign bonds rallied, particularly those with shorter maturities.

China co-chairs a committee of official bilateral creditors with France as part of a debt restructuring that Zambia is seeking under the Group of 20's Common Framework, a platform for highly indebted countries to rework their debt with bilateral creditors. At the end of 2021, China held about a third of Zambia's $17.27 billion international debt, according to Zambian government data. Musokotwane said negotiating with bilateral creditors including China before private creditors had "worked fairly well", but acknowledged there had been complaints from international investors who hold the country's sovereign bonds. It is now seeking a present value $6.3 billion debt reduction, or 49% of the external debt being restructured. "There is no point of pretending that there is something that is better, when doing so means that you leave Zambia still with an unsustainable debt situation," Musokotwane said.

☆ Analysis: IMF plugs financing gaps as riskier emerging markets face squeeze
▼ + stars: | 2022-10-14 | by ( Jorgelina Do Rosario | ) www.reuters.com time to read: +6 min

Ghana, Egypt, Tunisia and Malawi are all in talks on some type of IMF financing. Countries' debt burdens have risen. Turning to the IMF for financing has been the traditional playbook for smaller, strained countries in times of crisis. A set of new IMF tools should also help funnel more funds to such countries in the short-term. "But IMF does act as an anchor and allows access to a broader set of funding, even if not from the market," said Alexandru-Chidesciuc.

☆ Strikes, possible blackouts and a plunging currency: Brits are being hit by a wave of bad news
▼ + stars: | 2022-10-13 | by ( Elliot Smith | ) www.cnbc.com time to read: +7 min

'The recession has begun' The U.K. is the only G-7 economy not to have re-attained its pre-pandemic GDP level by the second quarter of 2022, Citibank Chief U.K. The ONS said GDP was only just returning to its pre-pandemic level, highlighting the challenge facing Prime Minister Liz Truss' "growth, growth, growth" agenda. "We now believe the recession in the U.K. has begun in the third quarter of 2022 and will likely last for three quarters. "The cost of living crisis is having a detrimental effect on individuals, not only financially, but physically and mentally too." Members of the CWU (Communication Workers Union) also continue to strike, including 115,000 postal employees of former state monopoly Royal Mail.

☆ Analysis: Global bonds move in lockstep, ramping up investors' risk
▼ + stars: | 2022-10-11 | by ( Davide Barbuscia | ) www.reuters.com time to read: +5 min

As a result, we’re seeing significantly elevated correlations between bond markets," said Andy Sparks, head of portfolio management research at MSCI. "The high level of correlation across global bond markets means that allocating to ex-U.S. bonds is that much less effective," said Gregory Peters, co-chief investment officer at PGIM Fixed Income. Peters doesn't expect the correlations to moderate until central banks' monetary policies diverge significantly, and he has reduced his exposure to sovereign bonds outside the U.S. "That's something that brings these global issues on U.S. investors' radars, because they are becoming first order market drivers." Martin Harvey, portfolio manager of the Hartford World Bond Fund, expects monetary policy regimes to start diverging next year.

☆ UK mortgage rates are soaring: Here's what you need to know as a first-time buyer
▼ + stars: | 2022-10-10 | by ( Sophie Kiderlin | ) www.cnbc.com time to read: +4 min

Uncertainty around the U.K. housing and mortgage market has spread among first-time buyers. Unfortunately, a number of other factors are simultaneously making their lives harder: namely, inflation, interest rates and mortgage market disruption," he told CNBC Make It. However, what they have saved on SDLT [stamp duty] will likely be eaten up on higher mortgage rates pretty quickly," he said. So, what about mortgage rates? This could go up even further, Nicholas Mendes, a technical mortgage manager at mortgage broker and advisor John Charcol, believes.

☆ Factbox: Companies potentially affected by Italy's election
▼ + stars: | 2022-09-25 | by ( ) www.reuters.com time to read: +5 min

A woman walks at a polling station during the snap election in Rome, Italy September 25, 2022. read moreHere is a list of companies that could be affected by the outcome of the election. The change of government and calls by Meloni to revisit Italy's national recovery plan could threaten Italy's ability to meet the commitments to which European Union post-pandemic funds are tied. Brothers of Italy welcomed CDP's decision to wait for the election before filing its non-binding bid for TIM's network. read moreBrothers of Italy has called for the new government to be allowed to make a final decision on ITA.

REUTERS/Kim Kyung-Hoon/File PhotoNEW YORK/LONDON, Sept 25 (Reuters) - Global investors are preparing for more market mayhem after a monumental week that whipsawed asset prices around the world, as central banks and governments ramped up their fight against inflation. "It's hard to know what will break where, and when," said Mike Kelly, head of multi-asset at PineBridge Investments (US). "Currency exchange rates ... are now violent in their moves," said David Kotok, chairman and chief investment officer at Cumberland Advisors. But the murky outlook meant that they were still not cheap enough for some investors. "We are of the view that markets are still massively underestimating the global economic growth hit that is coming," he said.

REUTERS/Kim Kyung-Hoon/File PhotoNEW YORK/LONDON, Sept 25 (Reuters) - Global investors are preparing for more market mayhem after a monumental week that whipsawed asset prices around the world, as central banks and governments ramped up their fight against inflation. "It's hard to know what will break where, and when," said Mike Kelly, head of multi-asset at PineBridge Investments (US). "Currency exchange rates ... are now violent in their moves," said David Kotok, chairman and chief investment officer at Cumberland Advisors. The fallout from the hectic week exacerbated trends for stocks and bonds that have been in place all year, pushing down prices for both asset classes. "We are of the view that markets are still massively underestimating the global economic growth hit that is coming," he said.

☆ Sri Lanka to unveil debt restructuring plan to creditors
▼ + stars: | 2022-09-23 | by ( Uditha Jayasinghe | ) www.reuters.com time to read: +2 min

Sri Lanka's President Ranil Wickremesinghe looks on during an interview with Reuters at Presidential Secretariat, amid the country's economic crisis, in Colombo, Sri Lanka August 18, 2022. The government has already held preliminary restructuring talks with neighbour India and diplomats based in Colombo. "Sri Lanka is focused on trying to get the IMF deal finalised by December or early next year." Sri Lanka's foreign currency debt was $47.3 billion as of end-2021 and local-currency debt at $53.6 billion, according to an update from the Ministry of Finance in August. The foreign currency debt includes $13 billion in international sovereign bonds held largely by private creditors, such as asset managers BlackRock (BLK.N) and Ashmore (ASHM.L).

Sri Lanka is struggling with its worst economic crisis in more than seven decades, which has led to shortages of essentials and the ouster of a president. BILATERAL DEBT TALKSSri Lanka also needs to renegotiate debt with bilateral creditors such as China, Japan and India. As a middle-income country, according to the World Bank, Sri Lanka is not able to engage in talks with bilateral creditors under the G20 common framework for debt treatments. Sri Lanka's total foreign currency debt of $38.7 billion amounts to 48.2% of GDP, the latest IMF report showed in March. The central bank governor said that the country has paid Sri Lanka Development Bonds in both dollar and local currency.

☆ Factbox: Sri Lanka set to begin talks to restructure debt of $30 bln
▼ + stars: | 2022-09-22 | by ( Uditha Jayasinghe | ) www.reuters.com time to read: +3 min

WHY THE NEED TO RESTRUCTURE DEBT? That in turn requires negotiation with private creditors and two-way lenders. That includes $13 billion in international sovereign bonds held largely by private creditors, such as asset managers BlackRock (BLK.N) and Ashmore (ASHM.L). The Paris Club informal group of creditor nations that includes India and Japan holds $4.9 billion of Sri Lanka's debt, and China about $5 billion more. Sri Lanka is the first middle-income country to default after the COVID-19 pandemic.

☆ Tokyo blinks in game of forex chicken
▼ + stars: | 2022-09-22 | by ( Pete Sweeney | Thomson Reuters | Asia Economics Editor Pete Sweeney Joined Reuters Breakingviews In Hong Kong In September Previously He Served As Reuters' Chief Correspondent For China Economy | ) www.reuters.com time to read: +3 min

Japanese yen and U.S. dollar banknotes are seen with a currency exchange rate graph in this illustration picture taken June 16, 2022. The BOJ would rather wait for the outcome of companies’ annual wage negotiations next year before leaping to policy conclusions. That further widens the gap between American and Japanese benchmark bond yields – already well over 3 percentage points – which further hurts the yen. Register now for FREE unlimited access to Reuters.com RegisterThat’s why Tokyo has decided to deploy some of its $1.3 trillion in forex reserves to stem the slide. Bond investors have already expressed scepticism towards the BOJ’s commitment to keeping the 10-year sovereign bond yield below 0.25%.

Whacked further by a soaring dollar, indices of overseas sovereign bonds in dollar terms are down almost 24% - even worse than then S&P500's (.SPX) 19% year-to-date reversal. Far from portfolio buffers, these sorts of moves make bonds meat and drink for hedge funds. And even though equity prices have fallen and cheapened on many models, their relative value versus bonds has not. It trimmed expected equity returns by a quarter point. Reuters poll-U.S. treasury yield outlookRobeco Chart on Asset Allocation HistoryThe opinions expressed here are those of the author, a columnist for Reuters.

☆ Exclusive: Ukraine calls for bespoke IMF and World Bank programmes
▼ + stars: | 2022-09-20 | by ( Marc Jones | ) www.reuters.com time to read: +6 min

U.S. dollar, euro and Ukrainian hryvnia banknotes are seen in this picture illustration taken in Kiev, Ukraine, October 31, 2016. read moreKyiv's goal though is a full-fledged IMF programme that would provide enough money and security to see it through the coming years. "I'm not sure whether standard tools of the IMF are really designed for this type of situation," he added. But its biggest single financing source is its own central bank, which has already had to print over $10 billion worth Hryvnia. Butsa said it is talking to the World Bank about a special facility for that money, where others, including private donors, could also contribute.

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